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What are Auditor Otto’s options — and what is she doing about them?

Rebecca Otto has been scrambling ever since lawmakers moved to allow county governments to seek reviews from private companies instead of from her office.

Auditor Rebecca Otto: "I was not happy with the way the law was passed and what was passed, and I made my concerns known and they did it anyway."
MinnPost file photo by Terry Gydesen

Rebecca Otto is trying out all her options.

The three-term DFL auditor for the state of Minnesota has been scrambling since the final night of the legislative session in May, when she heard lawmakers put a provision in the state government finance bill to allow county governments — the main entities her office audits — to seek reviews from private companies instead. Otto pushed back, but the change survived both regular session and a subsequent special session and is now in Minnesota’s law books.

Technically the new law doesn’t kick in until Aug. 1 next year, but Republicans in control of the House say they have little interest in revisiting the issue in the next legislative session, outside of reviewing a forthcoming report on her office from the legislative auditor. Another option pursued by Otto — asking 59 counties to sign a three-year contract with her office — has earned the ire of Republicans, who have requested she attend a hearing of the House State Government Finance Committee on Tuesday to answer questions about the move (Otto says she will not attend).

But she’s not out of moves yet. Some legal experts say Otto could take her case to the courts if other options fail. For now, Otto simply says she is “exploring” all her options.

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“I was not happy with the way the law was passed and what was passed, and I made my concerns known and they did it anyway. I still have concerns about the way the law is drafted; it creates inefficiencies for any auditor trying to audit counties,” Otto said. “ There are many options and they all have different timelines.”

If Otto does head to the courtroom, here’s a look at her case, what her opponents might say and why she likely hasn’t acted yet.

So, what’s the legal case? Hamline University law professor David Schultz says the law change last session may violate the separation of powers between legislative and executive branches etched into the state’s Constitution, and there’s precedent for that argument in Minnesota history. In 1985, lawmakers held a special session and attempted to transfer several positions in the state treasurer’s office — back then an executive job — to the Department of Finance, which was led by an appointed official. The treasurer at the time, Robert Mattson Jr., had essentially abandoned the state and his duties during a six-month period, and lawmakers argued the office wasn’t needed. But in 1986, the state Supreme Court struck down the change, saying the Legislature didn’t have the authority to transfer one of the office’s core functions to an appointed official.

Schultz points to another case where the Minnesota Supreme Court ruled that the Legislature and governor had to fund the courts in the midst of a government shutdown. If they didn’t, the court ruled, it would prevent the judicial branch from performing its constitutional duties.

“Her strongest argument is that legislative acts can’t either change the constitutional powers of her office or it can’t act in such a way to make it impossible for a constitutional office to perform her duties,” Schultz said. “So it will come down to if she can make the case that this change will demolish the ability of her office to function.”

What’s the counterargument? One obstacle in challenging the law change, Schultz said, is that the Legislature granted the auditor the authority to do county financial reviews in the first place. Only certain roles of the auditor, such as serving on specific state boards, is defined within the Constitution. In the case of treasurer, the court protected the office even though its specific duties were prescribed by the Legislature. But more than a decade later the office was abolished anyway and moved into the main budgeting department.

State Rep. Sarah Anderson
State Rep. Sarah Anderson

GOP Rep. Sarah Anderson, chair of the State Government Finance Committee who led on changing the auditor’s office, said Otto’s legal argument is also weakened by the fact that certain counties are already exempted from getting financial reviews from the state auditor. That includes the state’s most populous county, Hennepin.

“When you look at the fact that Hennepin County is the largest financially and they don’t have to be audited by the state auditor, that makes it even harder for her to argue that others have to do this,” Anderson said.

Attorney and former Republican legislator Fritz Knaak says there’s no provision in law that the state must “guarantee a certain level of business to the auditor.”

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Who would be her lawyer? Even though Otto is an elected statewide official, she would be challenging state law if she took the issue to court. In that case, Minnesota Attorney General Lori Swanson, also a Democrat, would likely have to defend the state. That’s what happened in the case of the treasurer back in 1986.

“The attorney general defends state statutes and acts essentially as the state’s defense counsel,” attorney general spokesman Ben Wogsland said. That means Otto’s office would have to hire its own counsel, which could be paid for at the public’s expense or through funds Otto could raise herself.

So, why hasn’t she taken it to court yet? Well, there’s still another legislative session on the calendar before the change kicks in next summer, and there’s a good chance a court wouldn’t find the case “ripe” until after lawmakers have another chance to change it, Schultz said. If there’s no action, Otto could file a lawsuit against the Legislature in Ramsey County Court next may May and ask for a temporary injunction until the court makes a ruling, he said.

Otto also said she’d like to give lawmakers a chance to change the provision next session.

“There is another session, another day, and I can’t predict anything,” Otto said. “This isn’t my office, this is the people’s office, and there has to be trust that money is going to be used according to the law and there is not cronyism or corruption. That is what we do; we are the watchdog. You have to have that function.”